What Is Business Impact Analysis?

Malcolm Tatum

Business impact analysis (BIA) is a type of assessment strategy that is aimed at identifying any factors that could have a negative impact on the well being of the company. As part of the analysis, once those factors are identified and the level of threat or risk to the company is ascertained, specific plans for reducing the severity of the threats are developed. In many cases, every facet of the business operation, as well as external factors that could apply, are considered and evaluated, and a workable response to those situations created.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

The process of a business impact analysis will usually begin with elements found within the company organization. This will include assessing the effectiveness of the current business model, especially in terms of maintaining both quality and quantity during production, internal processes for managing customer orders, and even the working environment found in company facilities. The idea of this component of the business impact analysis is to address and risk factors that the company has real control over and making changes to how business is conducted so the company is positioned to remain financially stable and possibly grow over time.

Along with internal factors, business impact analysis will also address issues that occur outside the culture of the company. This includes assessing the risk to the company based on the current state of the economy, competition within the marketplace, and even the reputation of the company among consumers. As part of this portion of BIA, efforts to determine what consumers think of the quality of the products, how they compare with similar offerings from competitors, and even how well the customer service and support is meeting the needs of clients will be investigated in detail. As to the reputation of the company, assessing market confidence or what others in the marketplace think of the company is also considered essential. When issues are discovered that could undermine the function of the company in the marketplace, actions can be taken to correct the issues and minimize risk.

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When the strategy of business impact analysis is used responsibly, companies can be prepared for a wide range of contingencies. Events that could threaten customer and supplier confidence can be address proactively and keep the damage to a minimum. At the same time, if workable contingencies are in place, the chances of business disruption for any reason can be kept to a minimum, proving to the market and consumers alike that the business is capable of dealing with circumstances that would cause a lesser company to fold.

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